TransCanada asks U.S. to suspend Keystone review

Delay could hand issue to next president

By Jennifer A. Dlouhy, Washington Bureau

November 2, 2015Updated: November 2, 2015 8:26pm

Photo: New York Times File Photo

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Pipes carry hot steam to well heads at Cenovus Energy's oil sands operation in Christina Lake, Alberta. Canadian oil companies had embarked on a race to develop cleaner technologies to make their production less damaging to the environment. less

Pipes carry hot steam to well heads at Cenovus Energy's oil sands operation in Christina Lake, Alberta. Canadian oil companies had embarked on a race to develop cleaner technologies to make their production ... more

Photo: New York Times File Photo

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This aerial photo shows a tar sands mine facility near Fort McMurray, in Alberta, Canada. The proposed Keystone XL would provide a new outlet for oil sands crude in Alberta.

This aerial photo shows a tar sands mine facility near Fort McMurray, in Alberta, Canada. The proposed Keystone XL would provide a new outlet for oil sands crude in Alberta.

Photo: Associated Press File Photo

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Trees dominate a field through which the Keystone XL pipeline is planned to run, near Bradshaw, Neb. The company behind the controversial Keystone XL pipeline from Canada to the U.S Gulf Coast has asked the U.S. State Department to pause its review of the project. TransCanada said Nov. 2, 2015, a suspension would be appropriate while it works with Nebraska authorities for approval of its preferred route through the state. less

Trees dominate a field through which the Keystone XL pipeline is planned to run, near Bradshaw, Neb. The company behind the controversial Keystone XL pipeline from Canada to the U.S Gulf Coast has asked the ... more

Photo: Associated Press File Photo

TransCanada asks U.S. to suspend Keystone review

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WASHINGTON — TransCanada Corp. asked the State Department to halt its review of Keystone XL indefinitely, potentially delaying a final decision on the proposed pipeline until a new president takes office.

The pause, requested in a letter Monday from the Calgary company to the State Department, adds new uncertainty to the controversy over the proposed pipeline, which would provide a new outlet for oil sands crude in Alberta.

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Keystone XL would transport diluted bitumen from Alberta oil sands projects over some 1,179 miles — and three states — to the Midwest, ultimately providing it a new pathway to Gulf Coast refineries that are configured for the heavy crude.

TransCanada’s move follows its Oct. 5 request for a Nebraska Public Service Commission review of the pipeline’s proposed route through the state, amid legal challenges over the constitutionality of a Nebraska law that allowed Keystone XL’s path to be approved three years ago. The commission review is expected to take seven months to a year, so if granted, TransCanada’s requested delay easily could push a final decision on Keystone XL until after the 2016 elections.

The State Department, which is vetting Keystone XL because it would cross the U.S.-Canada border, previously has postponed major decisions on the pipeline while state reviews were underway.

“TransCanada believes that it would be appropriate at this time for the State Department to pause in its review of the presidential permit application for Keystone XL,” Executive Vice President Kristine Delkus said in a letter to Secretary of State John Kerry.

Delkus said the requested pause “will allow a decision on the permit to be made later, based on certainty with respect to the route of the pipeline.”

The requested delay comes amid widespread expectations that the Obama administration is set to reject the $8 billion project. Plummeting crude prices also have stifled growth in Alberta’s oil sands, with Shell and other companies halting projects to extract a dense hydrocarbon know as bitumen.

“It is clear President (Barack) Obama was going to deny the permit,” Sen. John Hoeven, R-N.D., said in a statement. “TransCanada had been given every reason to believe its application would be denied by the current administration, despite the protracted review period and multiple favorable findings. Consequently, the company itself has been forced to delay the project further, and that’s unfortunate.”

Pipeline foes accused TransCanada of trying to delay in hopes that a Republican with a more favorable view of Keystone XL would be elected to the White House. But environmental activists said Obama can reject the pipeline anytime.

And Tiernan Sittenfeld, senior vice president of government affairs for the League of Conservation Voters, said it would be “absurd” for the State Department to suspend TransCanada’s permit application now.

“This is nothing more than another desperate and cynical attempt by TransCanada to build their dirty pipeline someday if they get a climate denier in the White House in 2017,” Sittenfeld said.

Obama previously has said his support for Keystone XL is contingent on that it “does not significantly exacerbate” greenhouse gas pollution. The president also has questioned the number of jobs expected to spring from the project and suggested most of the oil that would be carried by Keystone XL would be exported.

The State Department, which did not immediately respond to a request for comment Monday, has declined to give a specific timeline for a Keystone XL permit decision, but on Oct. 20 it said Kerry still was reviewing the project.

Even if the Obama administration rejected Keystone XL, TransCanada could reapply once a new president takes office.

Keystone XL advocates say the project would deepen the United States’ energy ties with a close ally, support American jobs and provide a reliable supply of heavy crude to Gulf Coast refineries.

Critics say it would unleash the development of Canada’s oil sands, by giving the bitumen extracted in Alberta a cheaper, easier route to Gulf Coast refineries, instead of more costly rail transport. Because the bitumen is typically extracted through open-pit mining and energy-intensive steam-assisted techniques, environmentalists say it produces more carbon dioxide emissions over its entire life cycle, from production to eventual combustion.

Keystone XL is one of several proposed pipelines to transport oil sands crude that have faced stiff opposition. Others include Enbridge’s Northern Gateway, which would carry 525,000 barrels of oil per day from Alberta to British Columbia, and TransCanada’s Energy East, which would deliver 1.1 million barrels of oil per day from Alberta to Canada’s East Coast.

The project has become a flash point in a larger fight over fossil fuels and climate change.

“Halting a basic infrastructure expansion project will not make this country more energy efficient or independent, but it does set a foreboding precedent about our ability to achieve those goals,” Heikamp said.

TransCanada already has built a 487-mile-long leg of the project that runs from Cushing, Oklahoma, to Nederland. But the border-crossing northern leg has been in varying stages of review since the company proposed it in 2006.